I was talking about this story with a guy I know who is a lawyer specializing in IP. It didn't seem to me like it would rise to criminal prosecution and he agreed.
While you might be right that the authorities won't take on the criminal case, you and your friend are wrong about the question of whether this is a criminal offense under the law. It's at least a colorable case of intentional infringement in a commercial setting.
(edited to fix grammar)